Venture investments decline marginally to $26.3 bn in 2018

Venture investments in the country declined marginally to USD 26.3 billion in 2018, even though there was a surge in number of deals announced, a report said Tuesday.

Investments by venture capital and private equity funds in the country declined in 2018 from USD 26.8 billion in the previous year, the report by consultancy firm Bain & Company said.

However, the number of transactions surged to 793 in 2018 as compared to 700 in the year-ago period, it said.

The 'dry-powder' (liquidity) available with investors focused on the country has declined to USD 11.1 billion at the end of 2018 from USD 11.7 billion in the year-ago period, but it is "more than adequate" and high quality deals will not lack capital, the report said.

Fund raising will continue to be a key priority for many investors in India, but most expect it to become more challenging in the next 12 months, the report said.

Powered by the USD 16 billion acquisition of Flipkart by American retail giant Walmart, 2018 was one of the best years for exits, it said.

The overall exits zoomed to USD 32.9 billion during the year as against USD 15.7 billion in 2018 and USD 9.6 billion in the year before that.

"Considering how India's economy is poised for growth in the coming year, many more exits are expected during the next few months," the firm's partner Arpan Sheth said.

The report said private equity funds are increasingly prioritising deal quality over quantity, with the top 15 deals comprising about 40 per cent of total deal value and the number of deals greater than USD 50 million increasing from the previous year.

Investments in consumer tech declined by USD 2 billion to USD 7 billion, but the sector continued to be the favourite for deal making, it said.

The banking, financial services and insurance (BFSI) segment remained dominant with almost USD 5 billion investments in 2018, driven by a rising class of non-banking financial companies (NBFCs).

Government regulations and tax breaks aided the growth of alternative investment funds and distressed asset management funds, it said.

Topline growth, cost and capital efficiency are expected to be the biggest creators of future value, the report said, citing a survey of investors it carried out.